A Beginner’s Guide to Life Insurance

Life Insurance is there to ensure your family is financially secure should something happen. But knowing that is just the start…

What exactly is Life Insurance?
For a surprisingly affordable monthly premium, Life Insurance delivers the peace of mind of knowing that should you die, your family will either have a lump cash sum, or a regular income, which can be used to pay off an outstanding mortgage or support them with paying monthly bills.

Term Life Insurance is the simplest and most affordable type of Life Insurance, designed to protect you for a set period of time. This is normally used to cover the mortgage, which is itself often limited to around 30-35 years. If you die during the policy’s term then you will receive a pay out, if you live beyond this point then the policy will end.

What are the different types of Term Life Insurance?
There are various types of Term Insurance, designed to deliver the most suitable cover for you.
Family Income Benefit: Instead of a lump sum, this policy will pay out a regular income to help cover monthly payments and bills.
Level term: The amount of cover and total pay-out remains the same for the policy’s term.
Decreasing term: The total pay-out will reduce over the term of the policy. This can be suitable to take out alongside a decreasing loan such as a mortgage.
Increasing term: The amount of cover and premiums increase over the term. This can be suitable to combat the rise in inflation and the cost of living, as well as changes in circumstances.

What is an impaired life?
This is a term used to describe someone whose current circumstances would cause the underwritten premiums to be higher than a standard application. This can include not just medical and physical conditions, but the lifestyle or occupation of the applicant as well.

An application may be impaired for several reasons. This can include pre-existing medical conditions, hazardous occupations, or those that take part in high-risk hobbies. If you think you may have an impaired life, we can work through the provider options with you, as there are several that specialise in this area.

What else do I need to know?
It is often a good idea to buy Critical Illness Cover alongside Life Insurance, to ensure a comprehensive level of protection. Critical Illness Cover will provide a cash lump sum, should you be diagnosed with a critical illness such as cancer, heart attack or stroke. Life and Critical Illness cover can either pay on a first instance basis, or on the event of both diagnosis and death.

Life Insurance policies can also be written into Trust, which means it will not form part of your estate and therefore not be liable for Inheritance Tax (IHT). It is important to get tax advice before making any decisions regarding your tax options, but we can point you in the right direction.

If you would like to discuss your life insurance options then speak to one of our advisers today!

Do you know what your credit score is?

Your credit score can affect your ability to borrow money or access products such as credit cards and loans. Everyone can check their credit score for free. One of the easiest ways to check your score is through an online agency such as Experian or Equifax. If it looks like your score isn’t as good as it could be, don’t worry, there are ways you can improve it!

How can I improve my credit score?

  • Register on the electoral roll – if you are not registered to vote then you will probably find it harder to get credit. It is easy to register on the electoral roll by post or online.
  • Correct any mistakes on your file – it is important to check all your details are correct because even a small mistake could have an impact on your score. It is also important to ensure all your personal details are correct, including your name and address with your local authority and government bodies.
  • Pay your bills on time – by paying for your bills on time you are proving to lenders that you are able to manage your finances well.
  • Check if you are linked to another person – if you are linked to someone else’s credit rating through means such as a joint account, their credit rating could affect yours.
  • Check for fraudulent activity – if something appears on your credit report that doesn’t apply to your activity, it may be a sign of fraudulent activity. If this is the case you should contact the credit reference agency and any other relevant bodies such as your bank to inform them.
  • Manage your debt – if you are struggling to manage your existing debt, you should seek debt advice. This is important because you don’t want to be issued with a County Court Judgement (CCJ) as it would have a huge impact on your credit score.
  • Reduce your debt – if possible you should reduce any remaining debt before applying for more credit. This is because lenders will usually hesitate to lend you more credit if you already have high amounts of existing debt.
  • Stay in one place – lenders prefer to see that you have resided at one address for a substantial amount of time.

How long will it take to improve my credit score?

Your credit history is built up gradually over time as you increase the amount of payments you make on time. If you have a negative mark on your history, such as a CCJ or late payment, it will usually stay there for at least 6 years. However, if this is the case there are still options available that we can help you with.

If you would like to discuss your credit score and its effect on what mortgage you could obtain then speak to one of our advisers today.

Are you covered for Christmas?

Christmas is a wonderful time for present giving, with the average UK household spending a massive £473.83* on presents every festive season. But this also makes it a good time for burglars as well. This is because the value of your home contents goes up, making it a bigger incentive for opportunist criminals.

Burglary is an invasive and upsetting crime, so it’s important to make sure you don’t have the added financial stress of replacing all those gifts around the tree. Fortunately, it is common among general insurance providers to automatically provide extra cover at Christmas. Many standard home insurance policies increase their cover by around 10%**.

But some don’t do this as part of their standard policy, so it is worth checking with your insurer. You may also want to consider whether a house full of presents has exceeded the claim limit on your policy.

This could include high value single items such as the newest gadgets, which may be worth more than the maximum claim allowed on single items. It is well worth taking the time to find out from your insurer exactly how they support you over Christmas.

If you don’t yet have contents insurance, or simply want to discuss whether your existing policy is right for you, then we can work through your options. We want you to relax at Christmas and enjoy your holidays, without the added worry of being protected.

If you would like advice on taking out or reviewing your home insurance policy then speak to one of our advisers today!

*Telegraph 2016 **Policy Expert

Give the gift of a deposit this Christmas!

What is a gifted deposit?

A gifted deposit is a sum of money that is given by somebody, usually a family member, which forms all or part of a deposit for someone buying a property.

What do you need to know?

  • It is important to remember that if you gift a deposit, it is just that, a gift. This means you will be required to sign a written declaration that states it is a gift and that the home buyer is not required to pay it back.
  • If you plan to give a gifted deposit you should seek independent advice to ensure you understand you will not have an interest in the property or the right to get your money back.
  • Most lenders will accept gifted deposits from close family members and a few will even accept gifted deposits from more distant relatives and friends.
  • The lender or solicitor may request to see a bank statement or other documentation to evidence where the gifted deposit has originated from.
  • A gifted deposit can be used alongside the applicant’s own savings or the Help to Buy scheme.

What are the alternatives to gifting a deposit?

There are many other ways parents can support their children when purchasing their first home and different ways borrowers can maximise their savings for their deposit.

  • Low-deposit mortgages – the availability of products that offer a 95% or 90% LTV has substantially increased. This means that mortgages are now more accessible for buyers with smaller deposits.
  • Guarantor mortgages – parents can be named on the mortgage to enhance the affordability for the first time buyer. They can also offset their savings or even take out a joint mortgage with their children.
  • Government schemes – if the buyer can’t be helped by their family, government schemes such as Help to Buy or Shared Ownership could be good options.
  • Help to Buy ISA – as well as the government schemes listed above, a Help to Buy ISA could assist the buyer in saving a larger deposit. The Help to Buy ISA provides a 25% bonus to first time buyers on a limited amount of savings when it is being used to purchase a house.

If you would like more information about giving a gifted deposit or other options for first time buyers then speak to one of our advisers today.

Should you get a Single or Joint Life policy?

Wanting to secure your loved ones’ future is something we can all relate to. It’s common sense to want to ensure that should the worst happen, they will be financially covered to cover costs such as mortgage repayments, childcare and funeral expenses.

Making life cover part of your financial plan is a big step towards that peace of mind. But if you are married or co-habiting, you may be asking yourselves an obvious question: Is it better to get two single life policies or a joint policy together?

As a couple, it might be instinctive to opt for a joint policy. But when making such an important decision, there are other things to consider. Here is a quick guide to some of the key things you may like to think about before coming to see us to discuss the next step…

Joint Policy:

  • Covers two lives in just one policy
  • Joint policies tend to be cheaper
  • Payout is normally claimed upon the “first death” only, but can be set up as “second death” which pays out when both policyholders die
  • Joint cover may not be suitable in the event of separation or divorce
  • Joint policies are not normally written in Trust as the policy usually pays out to the surviving partner as a ‘transfer of assets between spouses’, which is exempt from Inheritance Tax
  • Terms consider both parties and therefore partners won’t get individual terms as part of a joint life insurance policy
  • If both parents died, children would only get one payout

Two Single Products:

  • Two separate policies covering two separate lives
  • Two single policies are likely to cost more
  • Payout can be claimed on both lives, which will ensure the surviving person is not left without life cover, which may have higher premiums due to age or changes in health
  • Easier to keep covered in the event of separation or divorce
  • Single life policies can both be written in Trust. This means each of you can decide where the money goes on each policy. This will also avoid probate and Inheritance Tax (IHT)
  • Can be tailored to each individual’s needs and terms will reflect each partner’s circumstances and health
  • In the event of death of both parents, the children would receive two payouts

Whether you opt for a single or a joint policy can be based on many factors, all of which we can go through together with you and your partner. It also a good idea to add some critical illness cover to your policy, as well as child’s critical illness cover where suitable. Contact us today to arrange a meeting to discuss your protection needs.

Beginner’s Guide to Income Protection

What is income protection?
Income protection, commonly known as IP can provide monthly tax-free payments that replace part of your income. These payments help ease any financial hardship if you’re not able to work.

The cover usually pays out until you are able to start working again or until the end of the benefit or policy term. You can claim multiple times during the term of your policy.

You can also take out budget income protection which usually costs less but the payment period is limited for each claim.

Why should you take out income protection?
In the UK nearly a million people find themselves unable to work because of serious illness or injury every year (ABI 2015).

If you become unable to work, would you cope by surviving on your savings, sick pay or on state support, which is currently as little as £57.90 a week? If not, it is likely you will require an alternative way to continue to pay your essential bills and it may be worthwhile considering income protection.

How much does income protection insurance cost?
The cost of a policy will vary depending on various factors such as:

  • Age – usually the older you are the more you will have to pay for income protection.
  • Job – you may be asked to provide details on your job. If your job involves extra risks such as working at heights it is likely that you will have a higher premium.
  • Occupation definition – if your policy covers your own occupation it means you will be covered if you have been declared medically unable to do your own job. If you want to pay a lower premium you could opt for any occupation which means you won’t be covered if you are still able to work in any job or suited occupation which means you will be covered if you can’t work in a job similar to yours.
  • Smoker status – some providers will want to know your smoker status, if you are a smoker you may have to pay a higher premium.
  • Health – if you are in good health, have a low BMI and no family history of health risks your premium should be more favourable. However, some providers don’t take health into consideration.
  • Income to be covered – the higher your salary, the more income protection will cost you each month.
  • Waiting period before the policy pays out – you generally set payments to start after your sick pay comes to an end. The longer the waiting period, the lower the monthly premiums.
  • Range of illnesses and injuries covered – generally the more the policy covers, the greater the premium will be.

Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income.

If you would like advice on taking out or reviewing your income protection policy then speak to one of our advisers today!

7 Great Reasons to Contact Your Adviser

1. Your circumstances have changed
In a very short time your circumstances can change significantly. Many life events can come and go without you considering the implications they could have on your mortgage or on your protection needs. If you think something may have changed that is of importance, such as marriage, having children, a change of job or even changes to your health, let us know so we can revisit your mortgage and protection options.

2. You aren’t fully protected
We want to make sure you are protected should the worst happen. If you didn’t take out any protection when you took out your mortgage it may be a good idea to revisit this decision. Your financial position may have also changed since you first took out your mortgage. This means you could now have more money in the budget to build on your existing cover or start protecting yourself, your family and your lifestyle.

3. You could be saving money on your mortgage
If your current mortgage deal is coming to an end you will automatically be transferred on to your lender’s standard variable rate. This means you may end up making higher monthly repayments. If you want to check you are not paying more than you need to on your mortgage, then we are here to help you.

4. You are considering investing in another property
There are many ways you can invest in property. If you are thinking of investing in a buy to let property, a holiday let or another property investment option, then give us a call and we will be able to advise you along the way.

5. You want to help your children buy their own home
If your children are now all grown up, they may be looking to fly the nest and purchase their very own property. We would love the opportunity to help them find the right mortgage. We can also give you advice on all the different ways you can help children take their first step onto the ladder.

6. To discuss the mortgage and protection market
The mortgage and protection market is constantly changing. We would be happy to discuss changes in the market that could affect your mortgage, protection or future plans.

7. You were declined for a mortgage in the past
You may have previously been declined for a mortgage. However, there are now many more specialist lenders available to us. This means we have more options to help those with complicated borrowing scenarios. So, if you have been declined in the past it doesn’t mean the door is shut forever!

Don’t forget you can refer your friends and family to us– we are always happy to help!

Are micro homes the future of property?

What is a micro home?
A ‘micro home’ doesn’t have a strict definition, but is broadly classed as a home with a floor area under 37sqm, which is also the minimum size for a studio.

Micro homes are typically in prominent locations and often have communal areas inside and outside. The newer homes are usually well designed and have features such as air ventilation and good sound insulation.

How common are they?
There are high numbers of micro homes in major cities such as London, Leicester, Liverpool, Cambridge and Bristol. Demand for cheap housing in urban areas along with rising house prices has driven up the supply of these small establishments.

Micro homes are great for a cheaper alternative to regular sized properties, coming in at an average of £279,000 in London, which is less than half the average price of London homes sold in 2016. This shows they are a cheaper method of getting on to the property ladder, but buyers should also consider whether they will be a good investment and if they will be happy living in such a small space.

Who are micro homes built for?
As micro homes tend to be cheaper, close to cities and small, they are mainly bought by first time buyers and young professionals. However, they are often advertised to investors who benefit from capital growth and rental income.

How easy is it to get a mortgage on a micro home?
It is a common misconception that micro homes are extremely hard to mortgage. While they may be trickier to agree a mortgage on, some lenders will consider this type of property (subject to valuers comments). The likes of Santander, Nationwide and Halifax do not have minimum requirements for the square metre size of a property to make it eligible for a mortgage.

If you would like some more advice on the prospect of buying a micro home then speak to our adviser today

Are you Covered for Mental Health?

Critical Illness Cover and Life Insurance are vital to ensure you and your family are covered against worst case scenarios. But what about the most common scenarios?

This is where income protection* comes in. It normally pays up to 60% of your income and protects against long term absence. It serves as daily peace of mind should you need time off work, you won’t have the added stress of worrying about covering the bills.

How common is absence for mental health?
According to ECIS data, absences for mental health are as common as absences for colds and bugs. This makes mental health now one of the top three reasons for employee absence, with musculoskeletal conditions and general sickness.

The problem doesn’t look like it’s going away anytime soon either, with a recent NHS report showing that nearly a third of ‘fit for work’ notes issued by GPs are for psychiatric problems. This has now made it the most common reason for ‘fit for work’ notes to be issued, ahead of musculoskeletal diseases.

How can I cover myself?
Fortunately, most income protection providers pay out for absence for mental health, which unless you have budget income protection, will pay out for every occasion you are absent from work after the deferred period has elapsed.

It is also important to ensure that should you be off for mental health problems, you don’t have the added stress and anxiety of not working and not being paid. This can exacerbate the problem itself and extend your absence. What if I already have

What if I already have cover?
We recommend a good protection menu plan that covers all the scenarios that might make you vulnerable to financial shocks. Serious illness and injury are all too common reasons to be absent long term from work, which will not be covered by Life and Critical Illness cover.

Right now, absences from work for mental health are becoming more long term, with one in five psychiatric ‘fit for work’ notes issued for periods of over 12 weeks. This means that your employer being able to cover you during the period of absence becomes less likely, which makes income protection even more important.

*Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against loss of income.

We can work with you through your budget to ensure you have the most comprehensive cover possible, to protect against both worst case and common scenarios. Contact us today to arrange a meeting.

3 Reasons to Take Your Policy Out of the Drawer

The whole point of protection is to deliver peace of mind, with the knowledge that you and your loved ones are financially covered should the worst happen. So it is understandable to pop it in the proverbial desk drawer and forget about it. After all, it’s nice to know you are covered.

But as your adviser, we don’t want you to either miss out, or get caught out, by not checking your policy. It is important to understand what you are covered for and that it is still matching you and your needs.

Reason 1: Your life has changed
Time flies, so your circumstances can change quickly through life events such as having children, buying a house or changing jobs. What was the right cover before, could now be falling short of that comprehensive protection plan. As an adviser, we see people’s lives change dramatically from one meeting to another.

It’s easy to assume you are already “covered”, because you have some protection. But it is important to always ask yourself what would happen in the event of a serious illness or the unfortunate death of a breadwinner. Would your loved ones have a steady income to rely on and pay the bills? Even a stay-at-home spouse has financial value worth protecting, especially if they are looking after children.

Ask yourself: Do I have fewer or more dependents than before? Do I need to update beneficiaries on my life policy? Are there any options I can add onto my policy? Do I need to increase my coverage?

Reason 2: Matching your budget with your cover
We can help you check whether your budget could now cover more protection. If you can afford to build on your existing cover, it is economical to purchase protection when you are young, as premiums are generally lower for the same level of protection.

Reviewing protection doesn’t always have to mean increasing the costs, as your circumstances may now mean a more cost effective option for your policy. You may also consider whether your policy has been written into trust, which can prevent the policy forming part of your estate and being liable for Inheritance Tax.

Reason 3: Ensure you know about the extras
Royal London’s Helping Hand, Aviva’s Best Doctors Global Treatment and LV’s Doctors services are just three examples of the additional support your policy could deliver. Some of the support is also available throughout the term of the policy, so you may not even need to claim.

Some providers such as AIG, Scottish Widows, Royal London and Zurich are already delivering annual statements to policyholders. This will ensure you are aware of the policy details and the current extras and benefits that are offered.

Still not covered yet?
It is never too late to get protection. We can discuss a variety of options and create an effective menu plan to fit your needs and circumstances directly.